R.B. Vollum & Associates R.B. Vollum & Associates - Theory of Constraints in Action - Performance


R.B. Vollum & Associates - Theory of Constraints in Action - Performance

Companies must be able to turn on a dime with performance that was almost incomprehensible less than 10 years ago.

Robert B. Vollum, 2005


Theory to Action Implementing Synchronous Flow Management (SFM) and Theory of Constraints (TOC) means moving from the Cost World to the Throughput World. This requires a basic paradigm shift in the way a company attaches value to its decisions and its performance.

SFM/TOC represents a very different way to run a company from that which we learned as the traditional approach. The underlying philosophy of cost thinking and throughput thinking are worlds apart. The ideas embodied in mass production are challenged by the principles of constraints management from top to bottom, from inside to out.

Although the logic of synchronization and flow is straight forward, intuitive, and common sense, putting it in place can be difficult. When faced with the requirement to do something in a pressure situation, we tend to revert quickly to the familiar and comfortable, even though we may understand, intellectually, that another approach may be more appropriate.

Costing was developed early in the twentieth century when the world and the manufacturing environment were significantly different than they are in the twenty-first century. What made brilliant sense in 1900 may make no sense today. The focus of cost is the presumed containment of factory expense. The focus of throughput is expansion of market impact. It is not possible to measure the performance of a process of expansion with the yardstick of containment without creating contradictions and confusion.

 

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Principles
of Flow
The principles of flow are straight forward and intuitively simple. Resources, of any sort, are finite in their capacity to do work within a described period of time. When the demand placed upon a resource in that same described period is weighed against that available capacity, it will either fit within it, or it will exceed it. The resource will either be a bottleneck to the demand or it will be a non-bottleneck.

When the relative demands versus capacities of all resources in an associated flow are compared, some resources will have greater relative load than others, and one will be most heavily loaded. The one with the greatest relative load will constrain the performance of the others

When work is properly scheduled to get the maximum, uninterrupted performance at the most constrained resources, and when material release is controlled and properly buffered to sustain that performance without building unneeded queues of work at the less constrained resources, a factory will achieve optimal overall performance. Throughput (product produced and shipped) will be maximized; work in-process and finished goods inventory will be minimized; and the level of operating expense needed to support these positions will be lowest. Work will flow reliably, with minimal attention and effort, in relatively small quantities, and at relatively high velocity. Most resources, both equipment and people, i.e. those that do not control the flow, will experience regular periods of productive inactivity.

This environment does not describe conditions found in traditional facilities. Most often, conventionally run plants will produce relatively large batches, which will move sporadically in response to prioritized dispatching and expediting at universally heavily loaded resources. Emphasis will be on keeping resources and people busy rather than on keeping material moving.

 

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